PCORI Fee
The Patient-Centered Outcomes Research Trust Fund fee is a fee on issuers of specified health insurance policies and plans sponsors of applicable self-insured health plans that helps to fund the Patient-Centered Outcomes Research Institute (PCORI). The institute will assist, through research, patients, clinicians, purchasers, and policymakers, in making informed health decisions by advancing the quality and relevance of evidence-based medicine. The institute will compile and distribute comparative clinical effectiveness research findings.
The fee is paid annually using Form 720, Quarterly Federal Excise Tax Return. The payment paid through the Electronic Federal Tax Payment System (EFTPS) should be applied to the second quarter. Issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans will file Form 720, Quarterly Federal Excise Tax Return annually, to report and pay the PCORI fee.
Specified Health Insurance Policies and Applicable Self-Insured Health Plans
The fee is imposed on an issuer of a specified health insurance policy and a plan sponsor of an applicable self-insured health plan.
Specified Health Insurance Policies
For issuers of specified health insurance policies, the fee for a policy year ending before October 1, 2013, is $1, multiplied by the average number of lives covered under the policy year. Generally, issuers of specified health insurance policies must use one of the following four alternative methods to determine the average number of lives covered under a policy for the policy year.
Actual Count Method
For policy years that end on or after October 1, 2012, issuers using the actual count method may begin counting lives covered under a policy as May 14, 2012, rather than the first day of the policy year, and divide by the appropriate number of days remaining in the policy year.
Snapshot Method
For policy years ending on or after October 1, 2013, but before May 14, 2012, issuers using the snapshot method may use counts from the quarters beginning on or after May 14, 2012, to determine the average number of lives covered under the policy.
Member Months Method and 4
State Form Method: The member months data and the data reported on state forms are based on the calendar year. To adjust for 2012, issuers will use a pro rata approach for calculating the average number of lives covered using the member months method or the state form method for 2012. For example, the issuers using the member months number for 2012 will divide the member months number by 12 and multiply the resulting number by one quarter to arrive at the average number of lives covered for October through December 2012.
Applicable Self-Insured Health Plans
For plan sponsors of applicable self-insured health plans, the fee for a plan year ending before October 1, 2013, is $1, multiplied by the average number of lives covered under the plan for that plan year. Generally, plan sponsors of applicable self-insured health plans must use one of the following three alternative methods to determine the average number of lives covered under a plan for the plan year.
Actual Count Method
A plan sponsor may determine the average number of lives covered under a plan year by adding the total lives covered for each day of the plan year and dividing that total by the total number of days in the plan year.
Snapshot Method
A plan sponsor may determine the average number of lives covered under an applicable self-insured health plan for a plan year based on the total number of lives covered on one date (or more dates if an equal number of dates is used in each quarter) during the first, second or third month of each quarter, and dividing that total by the number of dates on which a count was made.
Form 5500 Method
An eligible plan sponsor may determine the average number of lives covered under a plan for a plan year based on the number of participants reported on Form 5500, Annual Return/Report of Employee Benefit Plan, or the Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan.
However, for plan years beginning before July 11, 2012, and ending on or after October 1, 2012, plan sponsors may determine the average number of lives covered under the plan for the plan year using any reasonable method.
For more information on these methods to determine the average number of lives covered under applicable self-insured health plans for the plan year, please see the final regulations (PDF).
E-file your PCORI fee using form 720 at TaxExcise.com!
Health insurance plan issuers and plan sponsor required to pay the PCORI fee should report and file the taxes using form 720 annually. They should report their form 720 taxes and pay the tax during the second quarter of the tax year. You should choose the PCORI category while e-filing form 720 at TaxExcise.com and file your PCORI taxes to the IRS. TaxExcise.com is an IRS-approved modernized online tax efiling service provider. You can easily e-file form 720 in all the parts and categories for your businesses and services. Since form 720 is the quarterly excise tax and must be filed/reported every quarter within the deadline, e-filing form 720 at TaxExcise.com is the best way to do that. You don’t have to go to the IRS office and paper file every time. You can simply register at TaxExcise.com for free and e-file form 720 directly to the IRS in a few minutes. We also facilitate all the IRS-approved online tax payment gateways. We ensure the smooth transaction of your tax payments in our highly secure network.
FAQs
What is the Patient-Centered Outcomes Research Trust Fund fee?
The Patient-Centered Outcomes Research Trust Fund fee is a fee on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans that helps to fund the Patient-Centered Outcomes Research Institute (PCORI). The institute will help patients, clinicians, purchasers, and policymakers make better-informed healthcare choices by advancing clinical effectiveness research. The PCORI fee comes under federal excise taxes and is required to pay this fee using Form 720.
Who should pay the PCORI fee to the federal government?
Issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans are responsible for reporting and paying the PCORI fee.
How to report the PCORI fee to the IRS?
People liable for PCORI fees must report and pay their dues using Form 720 once a year. Even though Form 720 is a quarterly excise tax form, the PCORI fee can be paid and filed annually during the second quarter. Therefore, taxpayers must be aware of the second quarter’s deadline and file form 720 before the time runs out.
What are all the exceptions in Form 720 PCORI fee?
The PCORI fee does not apply to exempt governmental programs, including Medicare, Medicaid, Children’s Health Insurance Program, and any program established by federal law for providing medical care (other than through insurance policies) to members of the Armed Forces, veterans, and members of Indian tribes (as defined in section 4(d) of the Indian Health Care Improvement Act).
Does PCORI apply to people working outside of the United States?
The PCORI fee applies only to policies and plans that cover individuals residing in the United States. Therefore, the PCORI fee does not apply to policies and plans designed specifically to cover employees working and residing outside the United States.